Kalahari wants to defer $24.6M in tax payments

Kalahari Resorts plans to request $24.6 million for infrastructure improvements in its proposed Tax Increment Financing zone, according to project officials.

MICHAEL SADOWSKI

Kalahari Resorts plans to request $24.6 million for infrastructure improvements in its proposed Tax Increment Financing zone, according to project officials.

At a public meeting before the Pocono Mountain school board Tuesday, project officials revealed for the first time that the costs of off-site improvements and incidentals eligible for TIF funding is $24.6 million.

That includes building an access road from Route 314 to the proposed hotel and traffic improvements of surrounding roads.

TIF zones defer payment of property improvement taxes, allowing the business to put that money into a fund that can be used for off-site and infrastructure improvements.

The taxing bodies affected are the school district (in this case, Pocono Mountain), the county (Monroe) and the municipality (Tobyhanna Township). All have to approve the parameters of the TIF zone before it goes into effect.

Joseph Hogan, of the firm Mullin & Lonergan Associates in Huntingdon Valley and the project's TIF consultant, said it won't be until at least March that Kalahari officials are back in front of the school board looking for approval of the TIF.

Kalahari is proposing a $350 million, 150-acre resort on what is now part of Pocono Manor's West Golf Course, abutting Interstate 380. It hopes to break ground in April.

At full build-out, it is planned to include the largest indoor water park in North America at 300,000 square feet.

It also would include about 1,200 hotel rooms, a 15-acre outdoor water park and a 300,000-square-foot convention center, the third-largest in Pennsylvania. The resort is expected to create about 1,500 jobs.

"It's a game-changer," said Chuck Leonard, executive director of the Pocono Mountains Economic Development Corporation. "With its magnitude, it's going to have a very dramatic impact on our region."

Leonard emphasized Kalahari will continue to pay property taxes while the TIF zone is in effect. He also said the taxing bodies will receive earned income taxes from the jobs the project will create, and real estate transfer taxes from the sale of the property, which hasn't been finalized.

The TIF fund does not forgive property taxes. The landowner pays all taxes on the unimproved land — what the tax bill would be for the property currently.

Right now the property pays $8,931 in school taxes, Hogan said. If the TIF is granted, the school district will collect that amount through the life of the project.

Hogan didn't have the calculations for what the property pays in taxes to Tobyhanna Township and Monroe County. It was not clear Tuesday when the township and county are expected to act on the zone application though officials have expressed support for the project.

Generally, Hogan said, school taxes are between 70 and 72 percent of a property's tax bill.

A TIF can be requested for up to 20 years. However, the increase in taxes that comes with an improved property is put into a fund property owners can use to pay for infrastructure improvements. Taxing bodies set the time, amount and boundaries of the TIF zone.

The project is to be constructed in three phases. However, Hogan said Kalahari is proposing the TIF zone only for the first phase. Kalahari would pay applicable property taxes on the second and third phases.

In exchange, Kalahari is asking for the zone to be funded at 100 percent of the improved property taxes for that first phase. TIF funds can be funded at any percentage the taxing bodies deem acceptable.

Hogan said the original amount Kalahari had intended to request was about $21 million.

However, that amount went up because the price of the access road jumped from about $1 to $2 million, and Pennsylvania Department of Transportation improvements, like traffic signals on Route 314, have risen from $5 million to $8.1 million.

The TIF is one of the key aspects to Kalahari's construction plan. It received TIF zone approval for construction at its Sandusky, Ohio, location and another at the proposed location in Fredericksburg, Va.